If you’ve ever passed on the vacation you wanted due to lack of money, you’re not alone. It’s a common attitude that vacations are both expensive and frivolous. Yet, you’ve probably got friends whose situations are similar to your own who seem flush with funds when it comes to getting away.
Making your vacations a priority is the first step. Combine that with a budget and some time to save, and you’ll begin to see that it’s really not that difficult to put aside the money. Having the extra cash before you go away is key to staying on track with a healthy financial picture. Floating a getaway on credit is typically a disaster for all but the most disciplined of people.
With three months to go before the heat of the summer travel season starts, it’s the perfect time to put a vacation savings plan in place. Here are some tips to help you get started.
Depriving yourself of the extras year-round is, frankly, hard, and when it comes down to your vacation, unnecessary. Enthusiasm works best over short spans of time, so saving for summer is easier to do in the spring, when the results of your efforts await at the end. So when you’re analyzing your expenses to cut out the extras, define a period of austerity. April, May and June for a July or August vacation is ideal.
Front-load your efforts as well, when your excitement is highest. It also matches the time frame when you’ll need money for deposits, flight tickets and other upfront costs. Everything you pay before you leave is something you don’t have to pay while you’re gone.
Your Tax Refund
When you have a refund on the way that’s generated by deferred tax investments, such as a 401(k), your wisest course of action is usually to flip the refund back over into savings. However, let’s be realistic and acknowledge the “free money” feeling of the refund check.
That’s not the case, of course, it’s your own money coming back to you, but when a vacation is in the works, the refund falls at the perfect time to allocate to your vacation effort. For most people, the timing of the refund is perfect for getting the vacation account started. Speaking of which…
The Vacation Account
Consider a separate account for your vacation savings. There are many practical advantages to keeping these funds separate. When you’re only blocking off vacation money in your head, it’s much easier to spend when unexpected expenses arise.
While setting up a savings account alongside your existing accounts is easy and convenient for transferring funds, consider an account with some degree of separation. Making your vacation dollars less liquid reduces the risk of premature spending.
Timing is everything, and when it comes to saving money for your vacation, the spring season has a few advantages. If you live in a cold weather location, you might have some reduced costs as the days get longer and warmer. Unless you’re on adjusted billing, bank the difference between your winter amounts for heat and electricity and your lower spring rates.
If you’re doing the traditional spring cleaning, look for an item or two of value that you’re no longer using and offer it up for sale on an online classifieds site. You can free up space and prop up your holiday savings.
Plan Your Current Spending
Keeping your day-to-day spending under control typically leads to less money spent. Even things as simple as grocery shopping from a list can save money by reducing impulse shopping. It’s important to capture these savings, though, and transfer to your vacation account.
Even if you’re a monthly budget person, find a way to make more frequent deposits into savings. For instance, if you budgeted $100 for groceries and you spent $85, get that extra $15 into your vacation account as soon as possible, before it’s spent on a fast food dinner that replaces an inexpensive home cooked meal.
Don’t be surprised to find that the steps you take to save for your summer getaway aren’t as difficult as you expected. That could be a sign of your changing priorities. One savings success story will pave the way to another, and before you know it, you’ll be the traveller creating envy among your friends.